Open Market Operations Are When the Fed Buys or Sells

question 336

Multiple Choice

Open market operations are when the Fed buys or sells

• A)government securities from the government.
• B)corporate securities from banks or some other business.
• C)government securities from banks or some other business.
• D)corporate securities from the government.
• E)gold.

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Definitions:

Equilibrium GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand in an economy.

Full Employment GDP

The output level produced by the economy when all available resources are efficiently employed, representing potential GDP under full employment.

Multiplier

In economics, a factor that quantifies the impact of spending changes in an economy, particularly the increase in income or economic activity resulting from an injection of spending.

Deflationary Gap

A situation where aggregate demand is less than the total supply of goods and services, leading to deflation and unemployment.